The Commonwealth, Interwar Years

After an internal backlash within the Nationalist Party forced the retirement of Hughes in 1923, Stanley M. Bruce became prime minister. The Country Party, founded in 1920 as a patriotic, conservative movement to protect the interests of farmers and graziers, joined the Nationalist coalition, although it kept its own identity. The chief opponent of the coalition was Labor, now committed to social-welfare objectives. To maintain wartime levels of production and expansion, the government sought to increase immigration, investment, and export industries (under the propaganda slogan “Men, Money, Markets”). However, the Great Depression that hit in 1929 cut deeply into the health of the Australian economy, increasing public and private debts at a time of massive unemployment.

Recovery from the economic depression, led from 1929 to early 1932 by James H. Scullin and the Labor Party, was extremely uneven. Deflationary economic policy contributed to economic effects that were far harsher than those felt elsewhere in the world. At its worst in 1932, unemployment reached almost one-third of the male workforce. Disagreement on government policy broke Labor again in 1931, and for the rest of the 1930s the United Australia Party, composed of former Nationalists and disenchanted Laborites, held the reins of power. The party was led by Joseph Aloysius Lyons.

Upon assuming responsibility for its own foreign affairs, Australia was guided by its cultural and political ties with Britain. Emphasis was therefore placed on following Britain’s leadership in solving the problems of the depression. Chief among these was an attempt to redirect more trade between Britain and the dominions. As early as the 1920s, however, Japan and the United States were among Australia’s best customers for its wool exports. Against its own interests, but motivated in part by fears of Japanese expansionism, Australia sought to reestablish British trade at the expense of its relations with Japan. In the League of Nations the Australian government tended to favor appeasement in order to avert war with the Fascist powers.